The carefully orchestrated events that result in a protective immune response are coordinated to a large extent by cytokines produced by T helper 1 (Th1) and T helper 2 (Th2) cell subsets, which are two arms of the immune system. Th1 cells preferentially produce IL-2, IFN-gamma and lymphotoxin, resulting in a cellular response that helps to eliminate infected cells. In contrast, Th2 cells produce IL-4, IL-5, IL-6 and IL-10 and stimulate an antibody response that attacks extracellular pathogens and helps to prevent the cells from becoming infected. Elucidating the mechanisms of the differential regulation of cytokine genes by different subsets of T cells is a field of intense interest. As an experimental system, we established an in vitro differentiation model of freshly isolated human peripheral blood T cells, and used IFN-gamma as a candidate gene to study the transcriptional regulation. Previously we have reported that methylation of the IFN-gamma promoter could play an important role in the differential expression of this gene in Th1 versus Th2 cells. Those studies were done in established clones and cell lines. In the present studies, we wanted to examine the methylation status of the IFN-gamma promoter in freshly differentiated Th1 and Th2 cells, and characterize the DNA-binding proteins involved in the recognition of the methylation-sensitive promoter region. Insights gained through the present studies could have a profound effect in developing a therapeutic strategy for manipulating Th1 versus Th2 polarization in order to treat and prevent graft-versus-host-disease and autoimmune diseases.